senate

Explanatory Memorandum

(Circulated by the authority of the Treasurerthe Hon John Dawkins, M.P.)This Memorandum takes account of amendments made by the House of Representatives to the Bill as introduced.

Chapter 13 SALES TAX: APPLICATION OF PENALTIES

Summary of proposed amendment

13.1 The proposed amendment will clarify the extent to which penalties can apply to acts or omissions that happen after the introduction of amendments of the sales tax law in the Parliament but before they receive the Royal Assent [amendment (2)] .

Explanation of the proposed amendments

13.2 Section 129 of the Sales Tax Assessment Act 1992 operates to relieve a person of liability for a sales tax penalty which would otherwise be incurred in the period:

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starting on the date a sales tax amending Act commences (or is taken to have commenced); and

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ending 28 days after the Act has received the Royal Assent ;

where that penalty applies as a result of the amending law.

13.3 The intended effect of the provision is that, until the 28th day after Royal Assent is given to the amending law, a person cannot be guilty of an offence or be liable to a penalty that arises from an infringement of the amending law.

13.4 For example, if an amending sales tax Act were to increase the rate of sales tax on certain goods, from 20% to 21%, with effect from the date of introduction of the Act (as a Bill) in the House of Representatives, then the result would be that:

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a taxpayer would be liable for late payment penalty under the existing law if the taxpayer failed to make a payment of tax at the 20% rate by the due date for payment;

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a taxpayer would not be liable for late payment penalty under the amended law if the taxpayer does not account for the additional 1% of tax by the due date for payment of the tax, provided that the taxpayer makes that payment within 28 days of the amending Act receiving the Royal Assent. If the taxpayer does not make that payment by that date, then late payment penalty will commence to apply from that date.

13.5 There has been some suggestion that section 129 could operate to relieve a taxpayer of any liability under the existing law for tax on an assessable dealing where that dealing is affected by the amending Act. In the example above, the argument would be that section 129 would operate to relieve a taxpayer for any late payment penalty on the payment of tax at the 20% rate.

13.6 The purpose of this amendment is to put beyond doubt the intended operation of section 129. This amendment is not considered to have any substantive effect on the operation of section 129.

13.7 The amendment will insert into section 129 an express statement that the section does not operate to relieve a person from liability to a sales tax penalty to the extent to which the liability would have existed even if the sales tax amending Act had not been enacted.